Review of Biden’s Strategy of Tech Competition with China

Wei Zongyou

Since taking office， Biden has gradually centered his China policy on strategic competition， identifying China as a strategic competitor and the most consequential geopolitical challenge. Unlike Donald Trump who focused on tariff and trade wars， the Biden administration sees technology as the key to strategic competition between China and the United States， believing that whoever wins in the technology competition will gain dominance of the international order in the post-Cold War era.

Strategic Goals for Tech Competition with China

A technology war against China was launched during the Trump presidency only as a “supplement” to the tariff and trade wars. After Biden took office， technology competition became part and parcel of strategic competition with China. For the Biden administration， it is not only about Americas economic competitiveness and military superiority， but also about whether the US can ultimately win the strategic competition that bears on its future. Based on such a strategic perception， the Biden administration has set three strategic goals.

First， enhance Americas technological competitiveness. Paul Scharre， Executive Vice President of the Center for a New American Security， observes that throughout history， technology has been critical to determining which countries dominate global politics， and that Western countries global colonial expansion could have not been possible without their technological strength. Since the end of World War II， as a leading economic and military power， the United States has also led the world in science and technology. It was second to none in terms of R&D inputs， sci-tech talent pool， publications， patents， and cutting-edge scientific discoveries. However， it is gradually losing its technological advantage since the second decade of the 21st century. In such key emerging technologies as AI， quantum technology， supercomputing， automation， 5G communications， and e-commerce， China is catching up or has even overtaken America. The Biden administration sees technological strength as the pillar of the countrys hegemony and the key to great power competition. To outcompete China， it needs to invest more in scientific research， and maintain its edge in high-end chips， AI， quantum computing， supercomputing， biotechnology， automation， next-generation communications， and other frontier technologies.

Second， maintain Americas military superiority. US hegemony is underpinned by military superiority which is largely attributed to its sci-tech strength. American scholar Chris Miller explains in the Chip War how Americas advantage in technology has led to its military superiority. In particular， in the current information war and the future intelligent warfare， strength in science and technology is critical to ensure military superiority. Recognizing the irreplaceable role of cutting-edge chips， AI， quantum technology， and supercomputing， the Biden administration believes whoever dominates these technologies will gain military advantage， and may turn it into battlefield superiority. Therefore， another strategic goal of the technology competition is to maintain Americas military superiority through enhanced sci-tech competitiveness.

Third， hobble Chinas technological progress. Apart from enhancing technological competitiveness and maintaining military superiority， the Biden administration also aims to delay or hold back Chinas technological progress. The policy address by National Security Advisor Jake Sullivan in September 2022 can be seen as a public announcement of this goal. Sullivan said in the speech that the US previously maintained a “sliding scale” approach to maintain comparative advantage， and stay a couple of generations ahead. That is not the strategic environment we are in today. Given the foundational nature of certain technologies， the US must maintain as large of a lead as possible.

The speech， which received little attention at the time， has been seen as a watershed or even the “Biden Doctrine” of Americas tech policy toward China. Since then， the US has tightened up policy in a bid to sabotage Chinas technological advances， and ensure its “absolute superiority” over China.

A Three-Pronged Approach

To realize the three strategic goals which constitute the “Biden Doctrine” of containment， the Biden administration adopts a three-pronged approach in competing with China in science and technology.

First， the American government has increased investment in and support to the homegrown high-tech sector. The invisible hand of the market alone can hardly allocate adequate resources to cope with Chinas rapid advances in high-tech. To maintain technological superiority， the visible hand of the government is needed as an intervention and additional support. Given the importance of advanced chips， artificial intelligence， quantum technology， biotechnology， and automation， and their role in modern military， the Biden administration makes it a top priority to invest in and support domestic R&D and production of high-end chips and other key technologies.

In August 2022， Joe Biden signed into law the CHIPS and Science Act， demonstrating his resolve to maintain US leadership in technology through hefty federal investment and substantial policy support. The Act directs $280 billion in spending over the next 10 years for scientific R&D. Some $52.7 billion is for semiconductor manufacturing， R&D， and workforce development to encourage “created in the US” and “made in the US”. The majority $200 billion is for R&D of key emerging technologies such as artificial intelligence and quantum technology. In addition， the government also enacted the Inflation Reduction Act which supports the development of clean energy technologies and industries， and encourages advanced manufacturing to flow back to the US with government subsidies.

Second， stringent export control and investment restrictions have been imposed on China. The US Department of Commerce issued a blanket ban in October 2022 on exports of advanced chips and chip-making equipment to China， prohibiting China from obtaining advanced chips， EDA software， advanced semiconductor manufacturing equipment， and materials for advanced chips from the US， and restricting Americans including Green Card holders from supporting development and production of advanced semiconductors by Chinese entities.

Gregory Allen， a scholar at the Center for Strategic and International Studies， noted that the Biden administration tries to choke off Chinas access to the future of AI by blocking it from designing and manufacturing advanced chips domestically， and making any progress in artificial intelligence， supercomputing and other key emerging technologies. “In weaponizing its dominant chokepoint positions in the global semiconductor value chain， the United States is exercising technological and geopolitical power on an incredible scale.”

On top of that， the US government under Joe Biden is also considering an “investment restriction order” on high-tech sectors in China. The CHIPS and Science Act prohibits recipients of subsidies or tax incentives from investing in the semiconductor industry in， or engaging in any joint research or technology licensing effort with foreign “countries of concern” including China. In March 2023， the US Department of the Treasury proposed rules that limit the amount CHIPS and Science Act recipients can invest to expand advanced chip production in China to 5%. Expanding a legacy facilitys production beyond 10% is also forbidden. The Biden administration also tries to quash Chinese high-tech companies by adding them to the “entity list” on national security or foreign policy ground， and cutting off their supply.

Third， a coterie against China has been put in place. The US bullies or woos its allies and partners to join it in containing and suppressing Chinas high-tech industry. The Biden administration is aware that， given the size of Chinas economy and interdependence of the global economy and technological ecosystem， it is difficult to counter Chinas advances， and maintain its technological advantage on its own. The US needs a supply chain alliance and export control alliance against China with the participation of chip giants around the world.

One example is the “Chip 4” alliance. In March 2022， Joe Biden proposed formation of a semiconductor supply network known as the “Chip 4” alliance that includes the US， Japan， the ROK and the Taiwan region to ensure that key technologies and production process for advanced chips such as R&D， manufacturing， packaging and testing are in the hands of the US and its trusted partners.

The other is an export control alliance that chokes off Chinas access to high-end chips， manufacturing equipment， and relevant software. The Biden administration focuses its “lobbying” on global chip powers like Japan， the Netherlands， the ROK and the Taiwan region. The leader of Chinas Taiwan region was the first to follow in the footsteps of the US. On October 8， 2022， a day after the American government imposed the chip export ban， the Taiwan region made the announcement to ban local chip manufacturers from contracting with mainland chip design companies or manufacturing advanced chips for companies in the mainland.

After months of intensive diplomatic negotiations and pressure， the US talked Japan and the Netherlands into establishing a high-end chip technology export control alliance against China in January 2023， which bans exports of high-end chip manufacturing equipment to China. It also keeps pressuring Korea to follow suit. At the Trilateral US-Japan-ROK Economic Security Dialogue in February 2023， the US and Japan persuaded the ROK to join the chip export control alliance.

Implications of Bidens Tech Competition against China

The Biden administration sees Chinas technological progress and China-US technology relations from the perspective of strategic competition and zero-sum games. Slowing down and holding back Chinas advance is seen as the key in the race against China. The US goes out of its way to coerce its partners and allies in Europe and Asia with a carrot-and-stick approach. Such a strategic vision and its supporting measures add further strain to the already intense China-US relations， and has a serious impact on the global division of labor in the realm of science and technology， especially the security of the global supply chain of advanced chips.

For starters， it will escalate tensions between China and the United States. When Joe Biden assumed office， there was expectation that as someone with rich experience in Congress and administrative bodies and multiple visits to China， he might bring some stability to the bilateral relations， and reverse the sharp deterioration under Donald Trump. However， two years into the Biden administration， the two countries have gone further on the path of competition， rivalry or even confrontation without any sign of stability and improvement.

Worse still， the Biden administration has taken a tougher line to pursue absolute superiority instead of comparative advantage over China in science and technology. Extreme measures have been taken to suppress China in key emerging technologies such as advanced chips， artificial intelligence， quantum technology， 5G communications， and supercomputing. A coterie has been put in place for containment and a technology cold war against China. These extreme moves have led to further deterioration of the bilateral relations and higher risks for strategic confrontation. As China sees it， these bans are major moves by the US to maintain its technological hegemony by suppressing competitive Chinese companies， which reinforces the narrative that the US seeks to stop Chinas rise.

Secondly， it undermines international division of labor in the semiconductor industrial chain， and impedes global technological progress. American economist Christ Miller noted that given the complex technology， huge capital investment and short upgrade cycle， even the US， birthplace of chip innovation with strong scientific research and financial strength， cannot monopolize the semiconductor value chain and supply chain， and that global resource allocation and international division of labor are needed to maximize the comparative advantage of all. American intervention in the semiconductor ecosystem through government subsidies and administrative means， and attempts to keep the entire value chain and supply chain in the hands of the US and its allies go against the laws of market allocation based on comparative advantages， and lead to a waste of resources and ineffective investment. Furthermore， erection of barriers will also hinder the sound development of the entire high-end chip industry and global technological progress. As the worlds largest chip market and importer， China is an important and lucrative client for high-end chip R&D agencies and manufacturers in the United States， Japan， ROK， the Netherlands. Losing the Chinese market means a big cut of profit for these companies， and a huge challenge for their R&D input， production layout， and even survival.

These moves by the Biden administration may somewhat slow down but not block Chinas progress in the R&D， design， and manufacturing of advanced chips. On the contrary， the ensuing disruptions to the value chain and supply chain will ripple through the development of chip technology in the countries concerned， and the global chip industry as a whole. According to estimates by US scholars， localization of the chip industry needs at least $1 trillion of upfront investment and an additional cost of $45 billion to $125 billion per year， and push up the price of chips by 35% to 65%. The IMF reckons that global GDP may drop by 5% as a result of trade disruptions， technology decoupling and economic conflict brought by the attempts to shut out China. International division of labor is undoubtedly more conducive to the healthy development of the global chip industry than protectionism.

Thirdly， it stokes a tech cold war. By pursuing the policy of suppressing and containing Chinas technological progress， the Biden administration is actually overstretching the concept of “security” and “weaponizing” the interdependence of technology supply chain. Scientific and technological progress should benefit the entire mankind. However， the US abuses the concept of national security， and uses it as a tool or even weapon for strategic competition and containment against China to hold back its technological progress. Such moves severely disrupt sci-tech exchanges and cooperation， and serve no ones interests. With its dominant position in the high-end chip industry， the US wantonly sets up roadblocks for chip designing， manufacturing， packaging and testing， and weaponizes interdependence， adding insecurity to the supply chain. Such practices are a typical example of technological bullying. By seeking tech decoupling and escalating competition， the US is actually taking strides towards a tech cold war against China.

Conclusion

The Biden administration has repeatedly stated that it has no intention for a “new cold war” against China， a conflict with or decoupling from China， holding back Chinas economic growth， or encircling China. But the reality tells a different story， at least in the filed of science and technology. A large number of Chinese high-tech companies have been added to Americas “entity list” for sanctions or disruption of supply chain. A tight ban on exports of advanced chips has been put in place. An export control alliance has been established with the intention of cutting off Chinas chip supply. Restrictions have been introduced to prevent American businesses from investing in advanced chips， artificial intelligence， quantum computing and other key emerging technologies in China. These measures are in essence “securitization” of technology and “weaponization” of economic interdependence， and a typical example of technology bullying. It also partly explains why China-US relations， instead of stabilizing from deterioration， have gone from bad to worse under Joe Biden， and why his China policy remains in the shadow of Trump.

Wei Zongyou is Professor of Center for American Studies of Fudan University， China